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Sanofi (France) (SAN.PA) Earnings Rise on Lower Restructuring Costs

7/26/2012 6:51:41 AM

Sanofi: As expected, Q2 2012 Business EPS(1) impacted by the loss of exclusivity of Plavix® and Avapro® in the U.S.

PR Newswire

PARIS, July 26, 2012 /PRNewswire/ -- Sanofi (NYSE: SNY; EURONEXT: SAN)

Q2 2012

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H1 2012

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Business net income1







Business EPS1







In order to facilitate an understanding of our operational performance, we comment on our business net income statement. Business net income1 is a non-GAAP financial measure. The consolidated income statement for H1 2012 is provided in Appendix 7. A reconciliation of business net income to consolidated net income is provided in Appendix 6. Consolidated net income for H1 2012 was 2,998 million, compared to 2,224 million for H1 2011. Consolidated EPS for H1 2012 was 2.27 versus 1.70 for H1 2011.

Commenting on the Group's performance in Q2 2012, Sanofi Chief Executive Officer, Christopher A. Viehbacher said,

"This quarter, we faced the anticipated loss of exclusivity of Plavix® and Avapro® in the U.S.The strategy initiated at

the end of 2008 focusing on the development of our growth platforms2, coupled with continuous tight cost control and

value-creating acquisitions allowed Sanofi to limit the impact on business EPS1. In addition, we made progress in

advancing our pipeline with the submission of Lemtrada (alemtuzumab)3 to the U.S. and EU regulatory agencies as

well as the recent initiation of a comprehensive Phase III program for an Anti-PCSK-9 monoclonal antibody4."

(Logo: )

Q2 2012 Performance

  • Total sales5 reached 8,870 million, an increase of 0.4% (2.5% on a constant structure basis). Net sales lost to generic competition were 163 million in the quarter.
  • Sales from growth platforms2 were 5,753 million (+7.6%) and accounted for 64.9% of total sales, compared to 60.9% in Q2 2011.
  • Emerging Markets6 sales were 2,823 million, an increase of 9.8% (or 10.4% on a constant structure basis).
  • Diabetes recorded another quarter of strong double digit growth (+13.7%)driven by the performance of Lantus® (+16.5% to 1,228 million).
  • Vaccines sales increased 3.0% supported by another record year for flu sales in the Southern Hemisphere which was partly offset by temporarily order limitations for Pentacel® in the U.S.
  • "New Genzyme"7 sales increased 9.1% to 434 million, supported by the recovery of Fabrazyme®.
  • Consumer Health Care achieved double digit growth (+11.3%) boosted by Emerging Markets.
  • The impact of the Plavix® and Avapro® loss of exclusivity in the U.S. was 331 million on the business net income which is consistent with the Group's previously announced projected impact of around 1.4 billion in 2012.
  • Business EPS1 of 1.48 was down 17.7% at CER.

R&D and Outlook

  • Lemtrada was submitted to regulatory authorities in the U.S. and in Europe in Q2 2012.
  • A broad Phase III program for our Anti-PCSK-9 monoclonal antibody has been recently initiated.
  • The performance of the first half of 2012 is in line with the full year guidance announced on February 8, 2012. Taking into account the loss of Plavix® and Avapro® exclusivity in the U.S., the performance of growth platforms, contribution from Genzyme and cost controls as well as other generic competition, 2012 business EPS1 is expected to be 12% to 15% lower at CER than 20118, barring unforeseen adverse events.

(1) See Appendix 10 for definitions of financial indicators; (2) See Appendix 4; (3)Lemtrada is being developed in Multiple Sclerosis in collaboration with Bayer HealthCare, Lemtrada is the proprietary name submitted to health authorities; (4) Collaboration with Regeneron; (5) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 10 for a definition); (6) See definition under "Net sales by geographic region" financial; (7) "New Genzyme" consists of rare diseases products and future Multiple Sclerosis products; (8) 6.65.
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2012 second-quarter and first-half sales

Unless otherwise indicated, all sales growth figures in this press release are stated at constant exchange rates1.

In the second quarter of 2012, Sanofi generated net sales of 8,870 million, up 6.2% on a reported basis. Exchange rate movements had a positive effect of 5.8 percentage points reflecting the appreciation of the U.S. dollar and, to a lesser extent, the appreciation of the Japanese Yen and Chinese Yuan against the Euro. At constant exchange rates, and adjusting for changes in the scope of consolidation (primarily the return of Copaxone® to Teva and the disposal of Dermik), net sales increased by 2.5%.

Net sales in the first half of 2012 reached 17,381 million, an increase of 7.8% on a reported basis. Exchange rate movements had a favorable effect of 4.2 percentage points driven by the appreciation of the U.S. dollar, Japanese Yen and Chinese Yuan against the Euro. At constant exchange rates, and after taking into account changes in structure (primarily the consolidation of Genzyme from the second quarter of 2011), net sales increased by 1.0%.

Growth Platforms (see Appendix 4)

In the second quarter of 2012, sales of the Group's growth platforms (including "new Genzyme") were 5,753 million, an increase of 7.6%, with double digit growth achieved by Diabetes and CHC, while Emerging Markets grew 9.8%. The Group's growth platforms accounted for 64.9% of total consolidated sales in the second quarter 2012, up from 60.9% in the second quarter of 2011. In the first half of 2012, growth platforms sales (including "new Genzyme") reached 11,134 million, an increase of 11.0% or 6.7% with Genzyme proforma (sales of Genzyme were not consolidated in the first quarter of 2011). Growth platforms sales comprised 64.1% of total consolidated sales compared with 60.1% for the first half of 2011.


Sales for the Pharmaceuticals business were 7,511 million in the second quarter of 2012, a decrease of 0.4%. The performance of growth platforms broadly offset the loss of sales of Copaxone® (impact of 119 million), disposal of Dermik (impact of 29 million), EU austerity measures and generic competition (resulting in 163 million impact, mainly to Lovenox®, Xatral® and Taxotere® in the U.S.; Taxotere®, Plavix® and Aprovel® in the EU). First-half 2012 sales for the Pharmaceuticals business were 14,827 million, an increase of 4.0%, which reflects the positive contribution from Genzyme (consolidated from April 2011).

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